Huawei reports a 36% first-half profit decline as rising AI research investment and costs weigh on earnings despite higher revenue.

Huawei Profit Falls 36% As AI Costs Rise

Huawei Profit Drops Sharply Despite Strong Revenue Growth In 2026

By News Desk On Aug 31, 2026

BEIJING: (News Desk) – Chinese technology giant Huawei reported a 36% decline in net profit for the first half of 2026, as higher spending on artificial intelligence research and rising costs weighed on its earnings.

According to the company’s report released Monday, Huawei’s net profit fell to 23.8 billion yuan ($3.54 billion) between January and June, compared with 37.2 billion yuan during the same period last year.

Despite the drop in earnings, Huawei’s revenue increased 9.5% year-on-year to 467.8 billion yuan.

AI Research Drives Higher Spending

Huawei allocated roughly a quarter of its first-half revenue to research and development as it continues to expand its computing technologies for artificial intelligence applications.

R&D spending reached 121 billion yuan during the first six months of 2026, up from 97 billion yuan a year earlier.

The company said the decline in profit was partly linked to increased investment in future-oriented basic research and AI innovation, while higher raw material costs also affected its financial performance.

“Throughout 2026, we have maintained strategic focus and we continue to hone our competitive edge,” a Huawei spokesperson said, adding that the company continues to face external uncertainty and rising costs.

Huawei Expands AI Chip Ambitions

Advanced semiconductors capable of training and running AI systems have become a central part of the technology competition between China and the United States.

Huawei has faced US sanctions since 2019 that have restricted its access to some advanced semiconductor technologies and equipment.

In May, the company said it had developed a new semiconductor manufacturing approach aimed at overcoming limitations caused by restricted access to the world’s most advanced chipmaking equipment.

Huawei’s increased investment in AI and computing technology comes as the company seeks to strengthen its position in strategic areas of the global technology industry despite continued supply-chain and geopolitical challenges.